Expecting investment of Rs. 500 - 600 crore on greenfield Dahej plant over next 2-3 years: Prakash Raman, Managing Director, Silox India

Production capacity rose by 30 per cent last year, driven by strong performance in the infrastructure segment, allowing us to operate at high utilization levels

Silox India specializes in inorganic chemistry and manufactures and markets various chemicals which are used in a wide range of sectors such as automotive, textiles, pulp and papers, coatings, and new energy vehicles, etc. The company is a global leader in Sodium Formaldehyde Sulphoxylate (Safolite) and Zinc Formaldehyde Sulphoxylate (Safolin). Prakash Raman, Managing Director, Silox India shares his perspective on current market dynamics as well as his company’s expansion plan…  

Latest industry trends and challenges in chemicals, anti-corrosion, paints and coatings? What strategic initiatives were undertaken by Silox India in 2024 to enhance its market position and operational efficiency? 

The performance of the textiles sector last year was a mixed bag. We have seen consistent demand from the domestic market, but we witnessed a downturn in export due to geo-political situation, driven by the Ukraine war, supply chain disruptions and lesser demand from Europe. The fluctuation in the cotton price impacted the sector badly in the beginning of 2024, however it improved towards the second half and by the fourth quarter, it started becoming more positive and robust. Overall, the textile market has grown but not to the expected level due to turbulence in the overseas market. 

Regarding automotive industry, our primary exposure is into the tyres and tubes. The demand profile is more stable as most of the automotive manufacturers recently did well in terms of volumes and numbers, however for our main product range i.e. the Zinc oxide and derivative, we have seen lot of competitive pressure on margins. The paint and coating is positive segment with the continued investment in the last 2-3 years on the infrastructure by the government on railways and airports. We see a sustained demand domestically and consistent demand growth from overseas. 

What's your forecast for the year 2025? How do you see the Trump factor affecting the global supply chain and your products? 

We expect the challenges to continue in the beginning of 2025, especially from the demand side where most of the customers were expecting the demand to come back strongly from second quarter onwards. However, we are seeing lack of clarity on demand due to the new situation emerging out of Donald Trump’s policy and few other disruptions.  

We have a long value chain and our products predominantly not be directly going to the USA but as intermediate product used in some other country. Industry is generally positive due to hawkish China policy and expecting it to be a business opportunity, mainly the chemical manufacturers from India. We have started getting new inquiries directly from the US, however, these inquiries need to be translated into business. 

What is the present production capacity of your plants? Any expansion or increment in the production capacity in FY 25-26? 

Production capacity rose by 30 per cent last year, driven by strong performance in the infrastructure segment, allowing us to operate at high utilization levels. At our Atladra and Ekalbara units in Vadodara, the performance was mixed because of the zinc oxide getting impacted due to competitive price situation, performance of the textile segment and hydro business. 

However, we are positive on long term growth and going ahead with full speed on our investment in Dahej which will eventually increase our production capacity between 30 to 35 per cent for some of our key product lines. We also continue to focus on optimizing the processes and de-bottlenecking the capacity. 

What is the capex that you have invested in FY 24-25 and what's the plan for the capex investment in FY 25-26? 

Last year, most of our capex has been either into de-bottlenecking or regular maintenance as per our plan. As far as the new investment is concerned, we will have more clarity once the approval from the Board comes by June 2025. This will be the highest capital investment of Silox at the group level, for the greenfield site at Dahej. Currently, we are just working on the engineering part and once we complete this, we will go to the Board for the final investment approval. We expect the Capex to be anywhere between Rs 500 to Rs 600 crore over the next 2 to 3 years.  

Keeping the political situation and Donald Trump strategy of putting additional tariffs on some of the countries, what should be the India strategy with respect to chemicals, recycling and corrosion refining and what's the role that Solix India sees for itself in making India a global manufacturing hub? 

I see this both as a threat and an opportunity. Since China continues to be a major supplier, there are clearly a few opportunities opening up for India. We anticipate more requests from new customers whom we never used to serve due to competitive position. It is very clear that the manufacturers are likely to diversify the source of supply. We are looking into how we can use the opportunity for our finished products. At the same time, we must wait to see if there are any challenges we need to prepare because of the ongoing negotiations between the US and India. 

What are you planning to manufacture at your new facility at the Payal Industrial Park? Any numbers on the production capacity and by when do you plan to start the construction work?  

This new facility will produce all of our Sulphoxylate products and Zinc Oxide and Zinc derivatives. We will do backward integration in making some of the intermediates too. Overall, we are looking into an additional capacity of 30 to 35 per cent that will help us in meeting the future growth demand of the market. We expect to start the commercial production by the first quarter of FY 2028. We are at the advanced stage of engineering and awaiting permission to start construction.  

You are a global leader in Sodium Formaldehyde Sulphoxylate (Safolite) and Zinc Formaldehyde Sulphoxylate (Safolin). Any new innovations or what's the next product you are looking for from a global leadership point of view? 

Customers are now looking for more efficient and environment friendly products. We are working on the formaldehyde free sulphoxylate which is for specialized application like baby clothing. We are customizing our product to meet the specific application requirements. We have started working with a few customers and preparing ourselves to meet their specific requirements. 

We have started targeting some of new market segments with the right quality product at the right pricing. We also have a few innovations to optimize the packaging to reduce wastage. We are also improving sustainability by adopting energy transition. In the last two years, 75 per cent of steam at our plants is getting produced from bio-based sources. Today, close to 38 per cent of our energy comes from the green source including wind and solar. By mid-2026, 70 per cent of our energy would be green which will save 29,000 tonnes of CO2 emissions per annum. We have been adopting new technologies to reduce the usage of water and have been able to reduce the consumption approximately by around 34 per cent in the last two years.  

Silox Group recently inaugurated a state-of-the-art Research and Innovation Centre in Vadodara, Gujarat. Could you elaborate on the strategic objectives behind this and how it aligns with Silox India's vision for innovation and growth? 

We have invested €2 million in our new Research and Innovation Center, set to be fully operational by July 2025. The Center will focus on fundamental research and application development for new products. The initial focus will be on the existing products. Additionally, it's going to be majorly focused on the recyclability or enriching of the precious metals. Today, we don't do much of the development work for our overseas entities but now we will be able to provide for the application development needs of the group entities in Europe or Canada. 

You are also planning another manufacturing facility at Paradip industrial area for recycling of lithium batteries. What will be the capex and the manufacturing capacity of the plant? 

Recyclability is going to be a key business opportunity. We have developed a pilot plant, and both R&D and final stages are completed for the recovery of the precious metal from the used batteries and other sources. Now, we are in the stage of scaling up to an industrial scale. We have successfully completed the land acquisition for the project, developed technologies and pre-qualifying some material made with some of the key customers. We are expected to have a clear vision on this probably by the third quarter this year and will be going back to our company’s Board before the end of the year for the future investment. 

How has Silox India integrated digital technologies into its operations in 2024 to enhance efficiency and competitiveness? 

We are doing it in two stages. For example, our Atladra site is more than 40 years old and we have limitation in terms of going fully digital especially in the manufacturing. But, our proposed plant in Dahej is going to be completely a plant for the future. The primary focus is just to minimize the man-machine interaction and avoiding transportation of any intermediate products, develop closed loop manufacturing process. 

We started using digital tools more on the logistics and are going more and more digital for avoiding the repeated paperwork and getting into their online real time data. We will be using digital tools for our people management in terms of the access control for security and safety of the people. We have just included some of the AI enabled system for safety management tools and also the visitor management besides for the training and development of the employees and teams in lead management. 

Silox India has been recognized for its CSR initiatives, including awards for health and nutrition efforts. What projects were prioritized in 2024, and what outcomes have been achieved? 

I am proud to mention that we have spent more than the statutory requirement with focus clearly on areas where we operate today because there are communities present close to our manufacturing sites. Most of our effort is focused in and around Atladra, Vadodara; Ekalbara, and Silvassa. 

We are working on skill building capabilities with the local ITIs. We have a combination of 40 ITIs in the Vadodara district and we help them in building the skills by enhancing the English and computer skills of the student who will be passing out. The second project is mainly focusing on hunger and education for street children. We have been providing the support for the last 3 years and closed almost 350,000 meals every year for the street children. Other major projects are on sustainable agriculture and biodiversity. 

 Your sustainability roadmap for FY 2025-26 and how are you planning to achieve it? 

Being a European entity, there is a CSR requirement supposed to be fulfilled in the beginning of 2026 and now it has been delayed by two years. We have already started working on it and compiling all the reporting requirements in our operations and defining our sustainability goal by 2030. We will be clear before the end of this year as we are collecting the data and are engaged with the external partners to help us in defining the report. Especially, our auditors are working with them to clearly define what is going to be the part for each of the entities and also for the global Silox group.  

Our growth will be coming from existing products, our focus on innovation and from sustainability. We will be investing in all the three segments for the future.